India’s New Agricultural Laws 2020: Looking Beyond Farmers’ Concerns

Utpal K De and Simi Mehta

Agriculture being the heart of every civilization, the sector and its primary stakeholder – the farmers-deserve much attention. The importance of the sector has more been realized during the Covid-19 pandemic, when almost all the sectors had been closed and the economy had to fall back on this sector as savior. Despite the fact that this sector also suffered a huge setback due the distorted market linkage, it was the only lifeline to keep the ball of economy rolling and kept hope of socio-economic revival alive.

However, this important primary sector, in spite of several policies undertaken time to time by various governments, this sector hardly achieved 2-3 percent annual growth rate, and the economic conditions of farmers, majority of whom are small and marginal, remained more or less stagnant.

With a view to improve the economic condition of farmers the present government also brought new farm laws in place of some existing laws that have created havoc repercussions in the country on the apprehensions of those to go against the interests of the farmers and therefore farmers from some northern states undertook a march to the borders of capital city and staged camping for months to show their repulsion against the new laws.

Various scholars have sided these laws saying much awaited reforms in agriculture but this picture juxtaposed with some scholars arguing that central government is in favour of strong privatization of agriculture. With this background, South Asian Studies Center at Impact and Policy Research Institute and Counterview organized a webinar on India’s New Agricultural Laws 2020: Looking Beyond Farmer Concerns.

Prof Ranjit Singh Ghuman-India New Agricultural Laws
Prof Ranjit Singh Ghuman-India New Agricultural Laws

At the outset, farmers’ apprehension of these laws to work against them and favour private companies have been described by Prof Utpal K De, of North-Eastern Hill University, Shillong. Though provision is kept for the farmers to sell their products anywhere beyond their state without any state intervention, how far the large number of small and marginal farmers can avail it remains questionable.

While the farmers are apprehensive of gradual reduction in government procurement at MSP and withdrawal of the mandis system. For small farmers, without having appropriate cooperatives, it becomes difficult to find markets in a different state. Further, the abolition of the Essential Commodity Act would allow hoarding of agricultural goods by a few companies, which may create an opportunity to exploit price variation and the market may become more uncertain to the non-unionized farmer having marginal bargaining capability.

Moreover, the new law has affirmed the provision for contract farming. While farmers can avoid some of the market and weather risks, there is a fear that the bargaining power of the big businesses, who can control the market always in their favor, would turn it disadvantageous for farmers. Also, through contract farming there is the chance of cultivation practices that would lead to loss of land productivity in the long run. 

Prof Ranjit Singh Ghuman, Professor, Centre for Research in Rural and Industrial Development (CRRID), Chandigarh, commented that according to the government, the farm bill has nothing to do with the MSP and the mandis will continue as it is and the new farm law is only a means to give greater freedom to farmers, and their income will increase provided they take the advantage of the new provisions.

However, he believed that the act of hasty implementation of the farm bill was anti-constitutional. “Though the government claims the reform to be urgent, what was the harm in consulting the farmers’ representatives before enacting the law, he questioned”? It is clear that in the name of farmers the nomenclature of the law is designed to benefit someone else and this view is shared by economists who believe that the law is not in favor of the farmers.

Also, the honorable Supreme Court has consented to the right of the farmers to protest, all of which hints to the flaw in the government, and the honorable Court has come up with a committee of experts to suggest appropriate measures for any improvement if possible, in this regard.

One of the stated objectives in the new law is to free the farmers from the middle-men. Nevertheless, the government has not guaranteed to prevent the uprising of a new set of middlemen. New forms of exploitation cannot be tolerated further. Moreover, the government claims that the law would facilitate private investment in the agricultural and rural infrastructure. “It is unclear as to what prevented such investment in the first hand”, he remarked. “The essential commodity act has legally allowed hoarders to charge exorbitant prices. The 1943 Bengal famine was not because of the non-availability of grains, rather the culprit was hoarding”, he said.

He reminded the bitter experience of contract farming in Punjab. Small and marginal farmers have not benefited from this venture and 86% of Indian farmers fall under this category. This brings about an unequal playing field and the benefit is skewed. Although there is no compulsion for farmers to engage in contract, he was of the view that the market environment would compel the farmers to do so.

All of these stress on the viability of the aim to increase farmers’ income. There are other ways this could be done, for instance by compiling with the Swaminathan MSP standard. Had this standard been followed, the Punjab farmers would have received from paddy alone 10771 crore more in a season. But the government has failed to comply. Instance of failing to keep the election promise, the lack of credibility, has been a reason behind the farmers unwilling to buy the words of the government.

The existing agrarian crisis needs to be understood and addressed. The concern is not only of farmers but of every citizen who consumes the farm produce. Food security is integral and it would be threatened if the crisis is not seen through the proper lens.  And this cannot be done by simply enforcing a law without dialogue. There is a need for new and better laws that would ensure growth and sustainable development.

Dr Swarna Sadasivam Vepa, Visiting Professor at Madras School of Economics opined on the protest being led by the Punjab and Haryana farmers, and the reason for the silence of the others. Those farmers are the most affected and they have the capacity to withstand and resist the government laws for a longer period.

The silence of the others in comparison with that of the Punjab and Haryana farmers does not imply their acceptance nor does it mean the act is good. Only an opinion survey conducted in various parts of the country would enable us to get a clear picture of the pros and cons of the law. Considering the fact that private investors have not been very interested in investing in agricultural infrastructure though they were not prevented to do so earlier. Thus, she was skeptical about what new benefits would proceed from the law as the laws in place now have not been very effective.

Dr Amerender Reddy, Agricultural Economist clarified on the problem of guaranteeing MSP. The MSP is not only to ensure food security by procuring wheat and paddy from the farmers, but also for the other crops it plays an important role in signaling the price. Now only paddy and wheat is being procured, and the cost is about Rs 2 lakh crore. If it guarantees MSP for all crops, then there is a need to establish procurement centers for it and also expand the budget beyond its capacity.

Furthermore, he restated that abolition of the Essential Commodity Act would facilitate private investors into the sector, however, it is likely to lead to the monopsonist situation. The act fails to address how the government would regulate such monopsonist and oligopoist situation which lies beyond the scope of APMCs.

Prof G Sridevi accentuated through the paper of B R Ambedkar that the low productivity is not because of small land holding, rather it is because of the insufficient capital investment going to the particular land. Public capital formation in the agriculture sector has declined and the private capital formation has helped only certain groups.

Ambedkar also propagated that land must be under the control of the state which should ensure equal distribution of the capital and other resources required for the productivity in an equitable manner. “The three bills, now proposed, do not discuss how the impact on the socially marginalized groups. In the process of development we require reforms, but reforms must be brought about through discussion and with an element of trust. The trust deficit in various groups today is because of the way the bill was brought out and approved”, she said.

There has been recorded improvement in the agricultural sector, but it is not sufficient to match the aspirations. Looking at the way forward, it is important to engage in healthy debate with all the stakeholders before proposing reforms and such debates should be fostered to understand the looming crisis. Structural changes will be imperative like crop insurance, income insurances, cash transfer and public investment in research and extension.

Acknowledgement: Gby Atee is a research intern at IMPRI and pursuing Bachelors in Economics from Ashoka University

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